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The department store chain Beales is on the brink of collapse and must find a buyer within days, with about 1,000 jobs at risk if the historic retailer does not complete a rescue deal.
The retailer, which began trading in Bournemouth in 1881, has filed notice of its intention to appoint administrators, as the company considers its options while seeking to complete a sale process begun last month.
Sources close to the firm said it was still hopeful of being able to secure a deal, amid interest from at least two suitors including another retail firm and a venture-capital investor currently holding 11th-hour talks with Beales and its financial advisers.
Details of the company’s problems come after Beales appointed the advisory firm KPMG in the final retail trading week before Christmas to help advise on its “strategic and financing options” – including a sale of the whole company or its subsidiaries. KPMG declined to comment.
In a bid to fund its moves towards a “sustainable business model”, the firm said it needed funding to support a refreshed strategy, which included a rejig of its product ranges and cost-saving efforts.
Beales, which has 22 outlets across the UK, including in Bedford, Mansfield, Perth, Southport and Yeovil, completed a management buyout in October 2018 led by its chief executive, Tony Brown.
Pretax losses for the group more than doubled to £3.2m in the year to March 2019 from £1.5m a year before as sales remained steady at £48.3m. The business had net current debts of £15.8m.
It said in those accounts that trading had been hampered by an industry-wide downturn in sales of women’s fashion and the 2018 summer heatwave.
Department stores are under pressure from rising costs, particularly business rates, and increasing competition, as the brands they have specialised in are increasingly going direct to shoppers either online or via their own stores.
The retail industry has warned that 2019 was the worst on record for sales, with the volume bought by customers falling for the first time in 24 years amid a dire period for high-street shops. Households across the country have been reining in their expenditure in recent months against a backdrop of heightened uncertainty over Brexit.
Several firms have reported a disappointing Christmas shopping period, the most important time of the year for retail industry profits. Marks & Spencer warned last week that it had been dented by rivals’ discounts as well as its own buying mistakes after it stocked up on too many men’s skinny jeans and mince pies. John Lewis, another high-profile department store operator, warned last week it could ditch the annual bonus for its 81,000 employees as it flagged a big fall in profits and announced the departure of its boss.
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